Labor nominee faces GOP heat

President Barack Obama’s nominee for secretary of labor, Tom Perez, came under fire on Thursday during his confirmation hearing from Republican senators who faulted him for keeping the federal government on the sidelines of a whistleblower lawsuit that the GOP lawmakers said could have netted as much as $200 million to the U.S. Treasury.

Republicans charged that Perez, who currently serves as head of the Justice Department’s civil rights division, traded away the potential windfall in that lawsuit in order to get the city of St. Paul, Minn., to drop a Supreme Court case that Perez feared could undermine a legal theory widely used to enforce civil rights laws.

Story Continued Below

“This case could have returned … up to $200 million,” said Sen. Lamar Alexander of Tennessee, the ranking Republican on the Health, Education, Labor and Pensions Committee. He pointed to a House report that “concluded this was a quid pro quo engineered by Mr. Perez” to prevent the Supreme Court from issuing a ruling that Perez feared would strike down the “disparate impact” theory used to press claims of racial discrimination.

Alexander accused Perez of inappropriate “wheeling and dealing” by linking the cases.

“It seems to me the duty to collect the money, the duty to protect the whistleblower [was] kind of left hanging in the wind,” the senator said.

Perez said his decision to discuss the cases in tandem with St. Paul officials was approved by Justice Department ethics advisers. He also said that final decisions about the handling of the whistleblower suit, alleging the city falsely certified its compliance with various federal housing laws, were made by officials in the civil division who generally handle such matters.

Perez and Democratic senators also said the whistleblower case was a loser, so the federal government’s decision not to step into it was of little consequence.

“The value to the United States of a losing case is zero,” Perez said, adding that the Justice Department’s top expert on the whistleblower law, the False Claims Act, had an “immediate, visceral reaction that it was a weak case.”

Sen. Sheldon Whitehouse (D-R.I.) recounted the expert’s advice more bluntly. “‘This case sucks….’ that was the professional judgment of the experts in the department,” the senator said.

The lawsuit was ultimately thrown out by a judge. Under federal law, whistleblowers can proceed with such cases on their own, but they almost always prefer to have the federal government join the case.

“I think it’s clear the department made the right call,” Committee Chairman Tom Harkin (D-Iowa) said. “I think the evidence clearly shows that you acted ethically and appropriately at all times.”